Constellation board OKs talks with EdF

09 December 2008

Constellation Energy announced that its board of directors has authorized the company to begin discussions with Electricité de France (EdF) related to EdF's proposal to acquire half of Constellation's nuclear generation and operation business.

In mid-September, MidAmerican Energy Holdings - over 80% owned by Berkshire Hathaway, which itself is chaired by billionaire Warren Buffet - offered to buy Constellation for some $4.7 billion. Additionally, under the transaction, Constellation would issue $1 billion of preferred equity yielding 8% to MidAmerican. That deal was approved by the boards of both companies.

Days later, EdF submitted a bid for Constellation, rivalling the surprise takeover move made by MidAmerican. However, the bid was rejected by Constellation's board, which said that it remained committed to MidAmerican's offer. EdF subsequently withdrew its offer and said it would not make an improved one.

However, on 2 December EdF made a surprise proposal to Constellation to acquire half of its nuclear generation and operation business for $4.5 billion, an offer it said was a "superior alternative" to MidAmerican Energy's offer.

Constellation said that its decision to begin discussions with EdF was made "following consultation with its legal and financial advisors, and in a manner consistent with its fiduciary responsibilities to shareholders, as well as its responsibilities under its definitive merger agreement with MidAmerican." The company added that it had not withdrawn its recommendation that its shareholders vote in favour of the merger with MidAmerican. A shareholder meeting to vote on the merger with MidAmerican remains scheduled to take place on 23 December.